Despite the Central Bank of Sri Lanka raising the key monetary policy rate by 100 basis points, foreign investors sold nearly US$14.7 million worth of Sri Lankan government securities in the week ending June 4, according to central bank data.
During the week alone, foreigners sold securities worth Rs. 4,768 million (US$1 = Rs. 325, or $14.67 million). With this, the total net foreign capital outflow from the country in the last four weeks alone has increased to US$65 million, as the local currency depreciates.
The Central Bank raised its key policy rate by 100 basis points on May 26 to control demand-driven inflation. Economic analysts had expected that the rate hike would slow the outflow of foreign capital from government securities. However, despite the rate hike last week, the rupee has continued to depreciate this week.